Dov Seidman's secret: You don't have to be a sucker to succeed

Dov Seidman, founder and CEO of the consulting firm LRN, shares his secrets.

Football is the most violent, competitive and masculine of American sports. Its stars can't be weaklings, one assumes: they must be rugged men who can take blows from the coach on the chin.

But when you look at the last six seasons of the U.S. Football League, the teams who prevailed are actually coached by polite gentlemen, not vulgar slave-drivers. They're not coaches who shriek, "I'll kick your dumb ass to kingdom come." They treat their players with respect.

Dov Seidman, founder of the company LRN, which advises organizations on organizational culture and values, thinks that's no coincidence.

"Today it's hard to yell at a player to spur him to play better. It no longer works," he says. And this doesn't just apply to football. Seidman claims that companies will be more successful if they adopt managerial approaches based not on blind obedience, but on values.

He further observes that many companies may be founded on values such as excellence, expansion, and service, but have no crisis mode.

"If crises were popping up once every 20 years, like before, then fine, there's no need to change," says Seidman. "But now crises are much more frequent. Each year there's a crisis. You need to achieve durability and growth simultaneously. Laws and policies are designed to explain to you what you may or may not do. Values tell you what you should do."

Seidman lays out his personal story, and his organizational philosophy, in his new book "How: Why How We Do Anything Means Everything," in which he addresses the power of values, creativity and the willingness to think differently.

Day One: Beat up classmates

He writes about his experience as a new immigrant to Israel from the United States, dragged by his mother from school to school in a foreign country, struggling with a new language. When his third grade teacher wrote instructions on the blackboard, Seidman concentrated on copying the instructions while the other children were already busy writing the answers. He was pegged as a child with learning disabilities.

He still remembers his first day at the Carmel school in Tel Aviv. The first thing he did was beat up kids in his class. It was his way of dealing with the world.

Moving to Israel was actually a bit of an accident. Seidman's mother came with her three kids for a short vacation in 1967. On the last day of the trip, his mother passed by a toy store and met Mrs. Rabinowitz. "The lady told her, 'This country needs your children, you have to stay in Israel,'" recalls Seidman. His mother decided in that moment to stay. "An hour later we were at a nearby kindergarten."

Little Dov's life in Israel was not easy. His mother bounced between Jerusalem and Tel Aviv, and Seidman alternated between four schools in both cities.

"My passion for toy planes saved me," he says. "I used to sit at home for hours and put together aircraft components. I couldn't read the instructions, because they were in Japanese. When my mom met teachers from school and they told her I was having trouble, she'd say: 'He can't be incompetent if he's sitting for hours building aircraft.'"

Despite private tutors, Seidman failed in school. He didn't even get good marks in English and didn't know what to do about it.

When he was 14, Seidman's mother took the children back to the United States. In America, Seidman excelled in football and wrestling; less so in his studies. But then he was seriously injured.

"I felt cursed," he said. "I began to devote more time to studying, but it was too late. I was behind the curve for my age group; my chances of being accepted to a good university were very low. My SAT test results were pathetic: 970 points out of 1,600. My good friend Reuben was accepted to UCLA and I was accepted to the University of California, Santa Barbara."

"I told myself there's no way I'm going to a bad school. I wrote a letter to UCLA and I told them that Reuben and I used to wash Lionel Richie's car every Saturday. How could it be that my friend was accepted and I wasn't? They let me in if I agreed to take a course in English".

This happened two days before school started, and most classes were full. "The only course available was philosophy and indentifying morality," Seidman says. "In retrospect, that's what saved me. I found myself. For the first time, I felt at home. I was like fish in water. I had a passion for philosophy."

Self-governance is the anchor

His success in philosophy led Seidman to Harvard Law School. A few months before completing his degree, one of his professors, Aharon Barak, at the time a justice on the Israeli Supreme Court, offered him an internship.

"He offered me the job in the summer of 1992, and I was supposed to begin the internship in March of 1993. I planned to work in a law firm, then in the Foreign Ministry and study for the bar exam. While I was working at the law firm, I spent two weeks in a library looking for an answer to a basic question. I thought it strange that a senior partner at my firm wasn't able to answer the question right away. So I got an idea to establish a network of law experts who could provide legal consulting to law firms, a company that democratizes legal knowledge. My firm rejected the idea, so I knew it was a good one."

Seidman decided to try to get big companies on board with the idea. But in those days, firms blocked outgoing long distance calls, unless they could be billed to clients. So Seidman called the only local firm, managed to connect with the legal advisor, and was invited to a meeting.

"I decided to start a company," he says. "I already had a debt of more than $100,000 from studying at Harvard, and I decided to raise $2 million. I never knew rich people, so I had to turn to dozens of people to invest. Finally, I managed to get the money from 45 people".

That was 18 years ago. Today the company employs more than 200 employees, most of who are based at the company's offices on Fifth Avenue in Manhattan. The Apple store is 50 meters away; the Plaza Hotel 100 meters down the road. In addition to his financial success, Seidman has become know for his ideas about ethics and organizational culture, particularly in light of the recent economic crisis.

Four core values

The four core values of LRN are humility, integrity, passion and truth. Seidman rewards employees for meeting these values, and the ones who determine whether or not they do are the employees themselves. An employee's self-assessment is compared to his assessment by 20 other co-workers, based on a questionnaire of 50 questions. Seidman says that often there are no significant differences between an employee's self-assessment of himself and the respect of his colleagues.

This idea of giving employees greater responsibility and freedom of action is something he tries to impart to other organizations.

"Management by values is better than management by laws," Seidman says. "In a place with regulations, people do bad things because there is no law against it. In a place with values and principles that guide the company, there is something to direct it through difficult times but also good times."

That sounds logical, but a comprehensive study conducted by Seidman reveals that only 3 percent of organizations operate with this philosophy. How do most organizations operate? Management by orders and instructions, obedience, acquiescence and other behaviors that used to dominate the market but no longer do.

Why not? The world is less stable. And in a volatile world where businesses rise and fall, you need an anchor. This anchor is self-governance based on values.

Seidman offers organizations his experience in building a business culture that is tailored to them. "If you look at businesses throughout history, you see an extraordinary innovation in products, prices, quality, services, supply chains, every aspect of business operations," he says. "Humans have created great innovations. But what about motivation? Whether to choose sticks or carrots? In most organizations, the model is traditional."

"There tend to be two options," he says. "The first is blind obedience, which is a bad thing, where the employee just does what the boss wants. This makes it difficult for the worker to identify with the organization, since he usually doesn't understand why he does what he does. The second option is a model where everyone knows the rules and adheres to them. I found there are many CEOs that say the right things on equity and fairness, but there aren't sufficient conditions for employees to act according to those principles. Companies place the employee in a box and ask him to think outside the box".

Seidman's theory suggests a third option, one based on the culture of a company. He's quick to point out, though, that there may be multiple cultures within a single organization. "Sometimes there are 60 different cultures at the same company," he says. "Many times I am asked to treat the culture of a particular division within a large organization. That does not mean changing the entire organization."

Seidman's comments about blind obedience recall the case of the late, legendary Apple CEO, Steve Jobs. Jobs had a reputation as a brilliant director and innovator, but also known for difficult behavior. "Apple is a paradox," Seidman says. "On the one hand company wants to – and did - change the world because of its innovations. On the other hand, there is much blind obedience within the organization's ranks."

The place of courtesy in a dog-eat-dog world

Seidman's story about the courteous football coaches raises questions about how a company can succeed with an inspirational and supportive atmosphere in the dog-eat-dog world of business, filled with greedy execs practicing dirty tricks. How can you survive with a soft and pleasant approach?

"Don't be fooled," he says. "I don't claim that bad people go away. There will always be schmucks that succeed. I'm trying to prove that you don't have to be a schmuck to succeed. You can maintain principles and succeed. And I'm not saying anyone who runs a business according to principles and values must be nice."

There are some organizations that Seidman can't help them: those for whom their business is only a business and carries no other meaning.

"What's the most famous line in The Godfather?" Seidman asks. "It's only business. It's not personal. Washington says it's just politics. So if it's just business, the thinking that greed is good is quite rational, and a declaration that something is 'too big to fail' is okay. But that's not enough to handle the current reality of multiple crises. In order to really succeed, you need common values and a common mission."

But is Seidman's approach just a reaction to the global crisis that has plagued the U.S? Wall Street needs everything it can get to pacify the public wrath it has occurred in the past four years. Maybe Seidman's ideas are just an air freshener, something fashionable for firms to adopt until the storm passes and then they can return to their greedy ways?

"Tell Jamie Dimon, CEO of JP Morgan, that it's just fashionable," Seidman responds, clearly annoyed. The FBI recently opened a criminal investigation against Dimon after a $2 billion trading loss rocked the markets. "We can't say moral values and culture are a passing fad. Greed will not disappear from the world."

Seidman is also outraged when his services are compared to giving advice on social responsibility. "I don't sell the service of social responsibility and philanthropy," he says. "My service deals with question of how to do business, how to act. Currently only 3 percent of organizations operate based on a self-governing system of values. But over the next decade, it looks like more organizations will operate in this manner. Cultural change takes a long time. It's no coincidence that the football coaches who won championships in recent years are younger, people who grew up in different culture."

One of the features of the new culture is the freedom facilitated by social networking. "People yearn for freedom, and indeed there is now more freedom to act and speak than in the past," says Seidman. "But the fact that you have freedom doesn't mean you'll use it for good. In Tahrir Square they celebrated freedom from the previous government, but it's not yet clear what they will do with their freedom."

Social networks provide an interesting case study. Employees representing organizations now have platforms to widely publish their own opinions, which can be attributed to their companies.

"You can tell your employees not to speak for the company," says Seidman, "but I prefer to say talk all you want in the name of the company, but speak with dignity and respect. If I withhold an employee's opportunities to express himself in social networks, I'll stop his ability to network and attract customers, promote the affairs of the company and help it advance its goals in social networks".

Seidman believes that crises accelerate the evolution and the development of corporate values in the business world. He points to the innovation of safety laws, which have become an accepted priority and standard value for all companies, though that didn't used to be the case.

Is maintaining values a luxury of wealthy and well-established companies with stable cash flows and thus the recreational time for values? Or do principles and values keep the company safe in times when business models break down? This question is particularly relevant in the context of the decline of print journalism around the world. Seidman has a predictable answer.

"Newspapers need business culture and values," he says. "Their mission has not changed. Although some of their business strengths are gone, people still need news. We need a government watchdog, checks and balances, someone to tell the truth. How do you rely on sources of information in a world of blogs? How do you validate a source of information in the information age?"

The business model of newspapers may be changing, he says, but their mission and purpose remain the same. A company's culture is a unique asset – the more committed the culture, the better off the company.

"We speak today on the paradox of happiness," Seidman says, "which means that if you only seek your own happiness, you won't find it. But if you do something meaningful, it will make you happy. This paradox is also true for success. The way I succeeded won't necessarily bring you success. But if you aim to do something meaningful for you, you will succeed".

Three organizational cultures according to Dov Seidman

Blind Obedience– How do we know? The information is hidden. How do we behave? The management is autocratic. What's the level of trust?How relationships work in the organization: Close supervision and some delegation of authority. How do relationships work with customers? Suspicion and surveillance. How do we recognize accomplishments and failures? Obedience. Penalties and discipline? Fear. How do we achieve goals? In the short term.

Informed Acquiescence– How do we know? Information is transmitted only when needed. How do we behave? According to rules. What's the level of trust? How relationships work in the organization: Checks and balances, contractual relationships. How do relationships work with customers? Fair pricing for a predetermined product. How do we recognize accomplishments and failures? Positive benefits on personal and organizational success. Penalties and discipline? Based on procedures. How do we achieve goals? Goals are posted short-and long-term.

Self Governance– How do we know? Knowledge is passed on transparently. How do we behave? According to values and principles. What's the level of trust?How relationships work in the organization: Great confidence and ratification. How do relationships work with customers? Added value beyond expectations. How do we recognize accomplishments and failures? Achieving goal satisfaction. Penalties and discipline? Own feelings of guilt or social pressure. How do we achieve goals? With an eye toward organizational heritage and long-term survival.

Sediman's method: "How?" not "How much?"

Seidman is the CEO of LRN consulting firm and author of the bestselling "How: Why How We Do Anything Means Everything," which proposes to reinvigorate corporate culture in the 21st century, and will soon be released in Hebrew (published by Matar). Since 1995, his company has consulted organizations in matters of corporate culture and ethics. His clients include Motorola, Sony, Johnson & Johnson, Unilever and Siemens.

Seidman's method advocates a single fundamental principle: In a global and networked era, the business focus should be less focused on "how much" and more focused on "how to." To him, the former idea represents the old administrative models, the hierarchical ones. Such businesses are either managed with a strong hand from above with an expectation of blind obedience or are managed in a more democratic approach, but one in which workers lack influence.

"The vast majority of organizations in the world today are moving between these two approaches: blind obedience or conscious passivity," Seidman says. "But neither fit in the 21st century. People aren't willing to give up more control of their lives."

Seidman claims that companies that strive for a culture of self-governance, with high transparency and a two-way relationship between management and employees, allows for the establishment of a culture of ethics which supports the accomplishment of goals and a positive impact on the world.

"In business, the claim that you can't manage what isn't measured is valid more than ever before," Seidman wrote in the Huffington Post last year. "We find that the traditional industry indicators simply do not work with international interdependence. We monitor revenues, risks, and many measures of 'how much,' but in fact values, behavior and culture are the main currency of business. As a result, leaders need to take a step back, and ask what is really important in business and how can we measure it."|

A survey carried out by Seidman among U.S. companies found that companies that have a culture of self-governance enjoy innovation five times more than organizations that act with blind obedience and 1.5 times more than those working with the "knowingly giving" model. There are fewer incidents of improper behavior, more loyalty from employees, and higher customer satisfaction. As a result, financial performance levels are even higher in these organizations.